New Delhi: Even Uber’s CEO is astonished by the company’s notorious surge pricing, as seen by the shockingly high fee that was recently charged to a journalist. Recently, Khosrowshahi was given a bill for a 4-kilometer journey across Manhattan, New York, which came to an astounding $51.69 (almost Rs 4,300), including the driver’s tip, during an interview with Wired editor-at-large Steven Levy.
“God, please. “Wow,” Khosrowshahi murmured, surprised by the price, when he saw the fare. The CEO was shocked to see that the fare was more than twice as high as his first estimate of “twenty bucks” for the trip’s expense.
The reporter told the CEO that surge pricing had driven up the price by $20 just five minutes before. In response to inquiries concerning this pricing policy, Khosrowshahi blamed rising labour and time costs as well as inflation.
“Everything is more expensive,” he told the reporter in a direct manner. This argument is refuted by Forbes research that shows Uber’s US pricing climbed at a rate four times faster than inflation between 2018 and 2022, for a total increase in fares of 83 percent over almost four years.
Notwithstanding the fact that the ride-hailing service reached a record 5 million drivers in August 2022, Khosrowshahi had previously attributed rising pricing to a lack of drivers during the coronavirus pandemic.
In India, surge pricing can drive the cost of a short 5-kilometer journey to up to Rs 300 in major cities, even in the absence of rain or festivals.
Uber recently revealed a record-breaking second-quarter performance, posting a profit of $394 million in the three months ending June 30. This was in spite of the controversy surrounding surge pricing.
Compared to the $2.6 billion deficit recorded during the same period last year, this represents a significant improvement. The company experienced its first profitable quarter since its founding in 2009, with operating profits for the period totaling $326 million.
Still, there have been repercussions from the price increase. Following the earnings release, Uber’s shares dropped by about 6 percent, suggesting that investors are concerned about the possible long-term effects of surge pricing.
